Arbitration first: High Court stays parallel court claims and declines anti arbitration relief

In Orange Transgroup Ltd and IT Way v Shein Distribution UK Ltd [2025] EWHC 2966 (KB), the High Court refused to grant the Claimants' application for an interim anti-arbitration injunction. Mr Justice Dexter Dias instead granted the Defendant's application for a stay in relation to the High Court claims filed by the Claimant, pending an imminent hearing before an arbitrator to determine the validity of an arbitration agreement.

The judgment underscores the general presumption under English law that an arbitral tribunal rather than the Court should first determine the tribunal's jurisdiction if at all possible, even in circumstances where there is a challenge to the validity of the arbitration agreement, and thus a challenge to the jurisdiction of arbitral proceedings. That presumption will not necessarily be displaced in circumstances where a party's allegations involve matters of potential public interest, despite the private nature of arbitration as a dispute resolution mechanism.

In determining whether to grant a stay of court proceedings when the validity of the arbitration agreement is in dispute, Orange Transgroup Ltd shows that the court will be acutely mindful of any risk of unnecessary duplication arising out of parallel arbitral and court proceedings. Consistent with the overriding objective under the Civil Procedure Rules,[1] the judgment highlights the English courts' emphasis on guarding against inconsistent decisions and double recovery.

In applications to stay proceedings under section 9 of the Arbitration Act 1996 (the Act), parties relying on arbitration clauses in English seated arbitrations can take comfort that, save in exceptional cases, the English courts will be slow to interfere with the arbitral tribunal's power to determine its own jurisdiction. That is the case even where a party to a contract containing an arbitration agreement challenges the validity of the arbitration agreement itself.

Background

Parties

The first claimant, Orange Transgroup Ltd (Orange), provides customs clearance, warehousing and forwarding services for retailers importing goods into the United Kingdom. The second claimant, IT Way Transgroup Clearance LLP (IT Way), is a related company that performs customs clearance on behalf of Orange.

The defendant, Shein Distribution UK Limited (Shein), is a company within the Shein Group, a lifestyle brand and e-retailer in the fast fashion space, founded in China.

Summary of the dispute

A contractual dispute arose between the parties in around January 2025, with Shein seeking the repayment of alleged overpayments under an agreement with Orange, totalling approximately £1.5 million, in an ICC arbitration. Separately, Orange and IT Way commenced High Court proceedings against Shein alleging misrepresentation and unjust enrichment among other causes of action. The Claimants claimed approximately £5.75 million in damages from Shein.

Central to the parties' dispute was what contractual arrangements governed their relationship, including whether a valid arbitration agreement existed. Shein alleged that it entered into a written service agreement with Orange in October 2021, for the provision of customs related services in respect of Shein's goods imported into the UK (the Service Agreement). The Service Agreement contained an arbitration clause providing for ICC arbitration by at least one arbitrator.

The Service Agreement appeared to be signed by a Mr Su Jing, who the parties referred to as "Bill". Shein alleged that Bill had executed the Service Agreement on behalf of Orange. The first Claimant denied it entered into the Service Agreement and claimed that Bill was a salesperson based in mainland China with no authority to bind Orange.

The Claimants’ applications

The Claimants, Orange and IT Way, appeared before the High Court in person having filed the following applications:

1. An application under Part 11 of the CPR, inviting the Court to declare that Shein had accepted the Court's jurisdiction to determine the parties' dispute.
2. A related application under CPR 3.4, for an order striking out applications by the Defendant for a stay of the High Court claims as "abusive", given that Shein had not disputed the Court's jurisdiction under Part 11.
3. Finally, an application for an order granting an interim anti-arbitration injunction, on the basis that the Defendant had "not waived High Court jurisdiction".[2] Alternatively, the Claimants argued that injunctive relief should be granted due to the "major" public interest in the issues raised in their claim against Shein.

In respect of the first application, the Claimants alleged that Shein had accepted the Court's jurisdiction in relation to the parties' dispute by failing to file an application challenging jurisdiction under Part 11 of the CPR. Dismissing the application, the Court held that Part 62 of the CPR provides the relevant procedural route for a stay application under section 9 of the Act. It was common ground that Shein had complied with the Part 62 requirements. In these circumstances, the Court found it would be "unnecessarily duplicative" to oblige a party to also make an application under Part 11.

Alternatively, even if a separate Part 11 application by Shein was required, Mr Justice Dexter Dias found that the Court would have exercised its discretion to cure any procedural defect under CPR 3.10.[3] Taken together, the documents filed in the High Court by Shein made clear its intention to dispute the Court's jurisdiction, including because it had indicated such an intention in its acknowledgment of service. 

The Court further found that the second application, seeking a strike out of the Defendant's applications for a stay, was entirely derivative of the Part 11 application. It therefore necessarily failed and there was no basis for characterising Shein’s stay applications as abusive.[4]

Given the Claimants' Part 11 Application had failed, the Court also refused their application for an interim anti‑arbitration injunction. The Claimants' alternative basis for seeking an anti-arbitration injunction, on public interest grounds, related to its allegations of serious misconduct against the Defendant, which included incidents of customs fraud and tax evasion.[5] The Claimants argued that these matters were more appropriate for consideration by a Court rather than in private arbitration, "[d]ue to public interest in transparency and accountability". On that basis, the Claimants argued that there was a "serious issue to be tried"[6], which is the first question a Court must consider in determining whether to grant an interim injunction.

In rejecting the Claimants' alternative basis for seeking an interim injunction, the Judge found that the Claimants had erroneously conflated the issue of public interest with whether there was a "serious issue to be tried". The Judge confirmed that the latter issue concerned whether a claim was properly arguable, noting that "[a] putative issue may have a theoretically vital public interest, but nevertheless be so fanciful and flimsy on its merits not to satisfy the serious issue to be tried test".

Mr Justice Dexter Dias noted that Shein’s claim was for the repayment of sums it said were owed under the Service Agreement, which it asserted to be valid. The first question was whether there was in fact a binding arbitration agreement in that contract, given the challenge to “Bill’s” authority. If the arbitrator ultimately found that no arbitration agreement existed, or that the arbitration clause was invalid, the Claimants would remain free to pursue their claims against Shein in the appropriate forum, which may include the High Court. Conversely, if the arbitrator concluded that she did not have jurisdiction, it would then be for her to consider the Claimants’ public interest arguments; she would have to decide whether, and to what extent, the serious misconduct allegations fell within the scope of the arbitration agreement, and whether they affected the appropriateness of the arbitral proceedings. The Judge found that these were matters for the tribunal in the first instance, and the Court was careful not to pre‑empt or constrain the arbitrator's assessment.[7]

Defendants' applications

Separately, Shein had brought applications against the Claimants seeking orders for interim stays of their High Court claims in favour of arbitration under section 9 of the Act, or alternatively an order striking out IT Way's court claim against Shein.

Granting the Defendant's interim stay applications, the Court noted that the arbitral tribunal may rule on its own substantive jurisdiction under section 30 of the Act 1996.[8] The power of the arbitrator to make such a decision not being in doubt, the question was whether the Court should decide the question first or refer the issue to the arbitrator in circumstances where the validity of the arbitration agreement was challenged by the Claimants. The Judge observed that the mere existence of the arbitrator’s power does not mean the court should always refer a dispute about the arbitrator’s substantive jurisdiction to the tribunal. Rather, an acutely fact-sensitive evaluation is required which depends on factors such as the state of the evidence and the progress of proceedings in the respective forums. Where the validity of the arbitration agreement is in dispute, it is open to the Court to take one of several courses.[9]

The court did not regard this as one of the “rare” cases where the matter of the arbitral tribunal's jurisdiction could be resolved on the papers.[10] The Judge commented that there was a "stark conflict of evidence" and many unanswered questions resulting from what he referred to as an "evidential void". The question therefore became which forum would provide the most expeditious and effective venue for the determination of the jurisdiction question.

The Court was satisfied that the issue of Bill’s authority would be most expeditiously and appropriately determined by the tribunal at a forthcoming hearing that had been directed by the sole arbitrator, noting the presumption that the arbitral tribunal should determine its own jurisdiction first if at all possible.[11]

The Judge found that such a course would not prejudice the Claimants. It was open to them to engage with the arbitral proceedings and file such evidence as they wished in relation to the jurisdiction issue. If the Claimants were successful before the arbitrator on the substantive jurisdiction question, then the path would be clear for them to apply to pursue their claims against the Defendant in the High Court.

It is noteworthy that the Court granted the interim stay in respect of IT Way's claim against Shein, even though IT Way was not a party to the alleged arbitration agreement. The Judge considered the overriding objective under the CPR and stated:

"I judge that it would be disproportionate and unjust for the defendant to be forced to grapple simultaneously with parallel proceedings in the ongoing arbitration and this court. This is especially so given the lack of clarity about the nature of IT Way’s claim as distinct from that of Orange. Given the lack of clear distinction between the claims of the two claimants, and now that Orange’s claim has been stayed, a genuine risk of unnecessary duplication and the disproportionate incurring of costs arises should IT Way’s claim proceed on its own. There is the further risk of inconsistent decisions and double recovery."

For completeness, the Court held it was not necessary to determine the Defendant's third application to strike out IT Way's claim. The Judge held that, to the extent that Shein's application did not fall away, it should be stayed pending the arbitrator’s decisions.

Comment

The Court’s approach in Orange Transgroup Ltd shows that, in the context of a dispute regarding an individual's authority to enter into an arbitration agreement, the English court is unlikely to decide the issue of the arbitral tribunal's jurisdiction on the papers, especially if the evidential record is thin. A party seeking a stay, on the basis of a valid arbitration agreement, may accordingly wish to provide relevant witness evidence regarding the individual's authority to enter into the agreement. In any case, there is a presumption under English law that the tribunal rather than the court should determine the arbitrator's jurisdiction to hear the parties' dispute. Such an outcome is all the more likely if the tribunal has already set a timetable providing for the efficient determination of preliminary issues relating to its jurisdiction.

When utilising the procedural route under CPR Part 62 to pursue a stay application under section 9 of the Act, it is also advisable for the applicant to clearly signpost a challenge to jurisdiction. However, arguments by respondents that the applicant “accepted” the court's jurisdiction by failing to issue a freestanding Part 11 application are unlikely to gain traction if the Part 62 procedure is properly followed and the intention to dispute jurisdiction is plain. Parties can also take comfort that, even if a technical misstep occurs in relation to a jurisdictional challenge, the Court may be willing to rectify it under CPR 3.10.

The judgment also demonstrates that the English courts will not necessarily restrain arbitral proceedings merely because there is potential public interest in relation to the allegations against one of the parties. In Orange Transgroup Ltd, it was found to be appropriate for the arbitrator to determine whether the Claimants' allegations of customs fraud and tax evasion against the Defendant fell within the scope of the alleged arbitration agreement.